On this page of StockholderLetter.com we present the latest annual shareholder letter from Toll Brothers, Inc. — ticker symbol TOL. Reading current and past TOL letters to shareholders can bring important insights into the investment thesis.
ANNUAL REPORT 2025
Toll Brothers Company Overview FINANCIAL SUMMARY INDUSTRY-LEADING COMPANY AND BRAND Revenues For Home Sales in FY ($ in millions) $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 20 21 22 23 24 25 America s Luxury Home Builder Founded in 1967 NYSE-listed (TOL) since 1986 Fortune 500 Company 4th largest U.S. home builder by revenues National Builder of the Year, Builder magazine Two-time Builder of the Year, Professional Builder magazine #1 Home Builder on 2026 Fortune magazine World s Most Admired Companies list* Company s Chairman and CEO Douglas C. Yearley, Jr. was named one of 25 Top CEOs by Barron s magazine in 2024 Earnings Per Share In FY ($) $16 $14 $12 $10 $8 $6 $4 $2 20 21 22 LUXURY HOMES AND COMMUNITIES 23 24 25 Contracts In FY ($ in millions) $12,000 $9,600 $7,200 $4,800 $2,400 20 21 22 23 24 25 Return On Beginning Equity FINANCIAL AND MANAGEMENT STRENGTH 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 20 21 22 23 24 National presence in over 60 markets across the United States Selling from 446 communities Delivered approx. 11,300 homes in FY 2025 Average delivered home price of $960,200 Control 76,100 home sites (57% optioned/43% owned) High-volume production of highly personalized homes Affluent customer base: home buyers added an average of approximately $202,000 in lot premiums and structural and design options to their homes in FY 2025 39 Design Studio locations nationwide Diverse Product Lines: o Luxury move-up homes o Millennial-focused luxury first-time homes o Active-adult and second homes o Master-planned communities; resort-style golf and country club living o Toll Brothers City Living: luxury mid- and high-rise urban for-sale communities 25 Liquidity of $3.45 billion: $1.26 billion in cash and $2.19 billion available under our $2.35 billion, 22-bank revolving credit facility Debt-to-capital ratio of 26.0%; net debt-to-capital ratio of 15.3% Focus on driving return on equity through more capital-efficient land buying, product optimization, and other strategies Seasoned executive management team: average 20-year tenure with Toll Brothers
JANUARY 2026 DEAR SHAREHOLDER Fiscal 2025 was another strong year for Toll Brothers. We delivered 11,292 homes, the most in our history, at an average price of $960,000, generating a record $10.8 billion in home sales revenues. In a difficult sales environment, we executed well and achieved an adjusted gross margin * of 27.3% for the year, which is a testament both to the strength of our brand and our strategy of balancing pace and price. Our selling, general and administrative expenses were 9.5% of home sales revenues for the year the third consecutive year they have been under 10%. As a result, we earned $13.49 per diluted share in fiscal 2025, compared to adjusted earnings of $13.82 in fiscal 2024. In fiscal 2025, we also grew our community count by 9%, continued to produce strong operating cash flows of $1.1 billion, returned approximately $750 million to stockholders through share repurchases and dividends, and generated a return on beginning equity of 17.6%. These results underscore the resilience of our business model and the strength of our affluent customer base. Our sharp focus on growth and efficiency both in our operations and in our land acquisition and development strategy will remain key to our continued success. Since fiscal 2020, we have increased home sales revenue by a compound annual growth rate of 9.3%, driven in large part by our ability to increase community count from 317 selling communities on October 31, 2020 to 446 at the end of fiscal 2025. In fiscal 2026, we expect to increase our community count by another 8 10%. This growth, in turn, has been enabled by our strategy of broadening our geographies, product lines and price points, as well as our shift to a more balanced portfolio of buildto-order and spec homes, all of which have significantly widened our addressable market and allowed us to pursue a broader range of market opportunities. In addition, these strategies have helped us bring down construction cycle times, improve inventory turns, and gain efficiencies in the land development and construction processes. Our spec strategy has also allowed us to appeal to buyers who need to move quickly but still want a home that reflects their personal style. By selling many of our spec homes during the early stages of construction, many of our customers can still choose their finishes at the Toll Brothers Design Studio, giving us an important competitive advantage over most spec homes. Adjusted gross margin excludes interest expense and impairments and is a Non-GAAP number. See appendix for reconciliation. Adjusted to exclude $1.19 of earnings per share generated from the sale of a single parcel of land to a data center operator. Adjusted earnings are non-GAAP. See appendix for full reconciliation.
While we have broadened our market by strategically diversifying our business, we have continued to refine the qualities that set us apart as America s luxury home builder. This includes our premium brand, reputation for quality, prestigious locations at the corner of Main & Main, distinctive architecture, unrivaled choice, and an extraordinary customer experience. These features are key differentiators for our affluent customers, a segment of the housing market that has proven to be remarkably resilient. According to data recently published by the National Association of Realtors, the median age of a first-time homebuyer is at an all-time high of 40, the median age of all buyers is now almost 60 and just one in five sales is to a first-time buyer. This means that the vast majority of sales in the market are to move-up or move-down buyers, which plays right into our luxury strategy. Over 70% of our business serves the move-up and move-down segments. These buyers are wealthier, have greater financial flexibility and most have equity in their existing homes. The remaining 30% of our business is focused on the older and more affluent first-time buyer, who is also feeling less affordability pressure. In addition, the long-term prospects for the housing market overall remain positive. Demographics continue to be favorable, with Millennials still in their prime home buying years and Gen Z right behind them. We also continue to have a structural undersupply of millions of homes in this country, with the average age of a home in the U.S. now 40 years and growing. All of these trends support demand for new homes, and in particular the luxury homes that Toll Brothers is known for. We begin 2026 with a renewed focus on our core homebuilding operations and a solid financial position. To this end, in 2025 we announced the sale of approximately half of our Toll Brothers Apartment Living business, including our operating platform, for $380 million. We intend to sell the remaining assets and fully exit the business over the next few years. Our difficult but necessary decision to exit the multifamily development business was driven by our belief that, as a public homebuilder, we have not received full credit for the earnings generated by it. The sale unlocks significant capital, which we will use to both grow our core homebuilding business and return cash to stockholders. Our balance sheet remains strong, and we have ample liquidity, as we ended the year with $3.5 billion in total liquidity and a net debt-to-capital ratio of 15.3%. Our strong financial position is a strategic asset, providing us with flexibility to pivot our land spend and other capital uses to adjust to evolving market conditions. We also begin 2026 with a strong leadership succession plan in place. In January 2026, Toll Brothers announced that I will be transitioning to the role of Executive Chairman of the Board, and that Karl Mistry will take the helm as Toll Brothers Chief Executive Officer on March 30, 2026. Karl is an outstanding leader with a wealth of Net debt-to-capital ratio is a non-GAAP number. See appendix for reconciliation.
experience gained over the past 22 years with the Company. Following Karl s promotion, I will remain active with the Company as Executive Chairman and ensure that his transition to CEO is a smooth one, just as Bob Toll did for me. This announcement is the culmination of a thoughtful long-term CEO succession planning process led by our Board of Directors. As Fortune magazine noted, The announcement that Karl Mistry will become the next CEO of the luxury homebuilder Toll Brothers is more than a routine leadership change. It highlights a succession model at the Fortune 500 stalwart that s built around continuity and internal development rather than episodic change. The article went on to describe how Toll Brothers has invested in talent early, tracked it over time, and created credible internal pathways to senior leadership. Indeed, the deep bench of talent we have at Toll Brothers is a testament to one of the enduring legacies that Bob Toll left to me and to all of us, which was his commitment to teaching and developing the next generation of leadership. I am so pleased that this legacy has now come full circle, and I have the utmost confidence that Karl is the right person to lead this great Company into its next successful chapter. In January 2026, Toll Brothers was named the #1 Most Admired Home Builder in Fortune magazine s list of the World s Most Admired Companies. This is the ninth year that we have achieved this honor, and it is a direct reflection of our employees dedication to excellence throughout our nearly 60 years of building luxury homes. I would like to thank them, as well as our loyal shareholders, our trusted trade partners, and our valued customers, for their ongoing enthusiasm and support of our Company. We honor our history and continue to build our legacy every day as we deliver the American Dream to thousands of customers each year, and we look forward to an even brighter future of growth and value creation for all of our stakeholders. Sincerely, Douglas C. Yearley, Jr. Chairman & Chief Executive Officer 3
 • shareholder letter icon 1/29/2026 Letter Continued (Full PDF)
 • stockholder letter icon 1/25/2023 TOL Stockholder Letter
 • stockholder letter icon 1/31/2024 TOL Stockholder Letter
 • stockholder letter icon 1/30/2025 TOL Stockholder Letter
 • stockholder letter icon More "General Contractors & Builders" Category Stockholder Letters
 • Benford's Law Stocks icon TOL Benford's Law Stock Score = 99


TOL Shareholder/Stockholder Letter Transcript:

ANNUAL REPORT
2025

Toll Brothers Company Overview
FINANCIAL SUMMARY
INDUSTRY-LEADING COMPANY AND BRAND
Revenues
For Home Sales in FY ($ in millions)
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000






20
21
22
23
24
25
America   s Luxury Home Builder
Founded in 1967
NYSE-listed (TOL) since 1986
Fortune 500 Company
4th largest U.S. home builder by revenues
National Builder of the Year, Builder magazine
Two-time Builder of the Year, Professional Builder magazine
#1 Home Builder on 2026 Fortune magazine World   s Most Admired
Companies    list*
Company   s Chairman and CEO Douglas C. Yearley, Jr. was named one
of 25 Top CEOs by Barron   s magazine in 2024
Earnings Per Share
In FY ($)
$16
$14
$12
$10
$8
$6
$4
$2

20
21
22
LUXURY HOMES AND COMMUNITIES
23
24
25
Contracts






In FY ($ in millions)
$12,000
$9,600
$7,200
$4,800
$2,400

20
21
22
23
24
25
Return On Beginning Equity
FINANCIAL AND MANAGEMENT STRENGTH

30.0%
25.0%


20.0%
15.0%
10.0%

5.0%
0.0%
20
21
22
23
24
National presence in over 60 markets across the United States
Selling from 446 communities
Delivered approx. 11,300 homes in FY 2025
Average delivered home price of $960,200
Control 76,100 home sites (57% optioned/43% owned)
High-volume production of highly personalized homes
Affluent customer base: home buyers added an average of
approximately $202,000 in lot premiums and structural and design
options to their homes in FY 2025
39 Design Studio locations nationwide
Diverse Product Lines:
o Luxury move-up homes
o Millennial-focused luxury first-time homes
o Active-adult and second homes
o Master-planned communities; resort-style golf and country club
living
o Toll Brothers City Living: luxury mid- and high-rise urban for-sale
communities
25
Liquidity of $3.45 billion: $1.26 billion in cash and $2.19 billion available
under our $2.35 billion, 22-bank revolving credit facility
Debt-to-capital ratio of 26.0%; net debt-to-capital ratio    of 15.3%
Focus on driving return on equity through more capital-efficient land
buying, product optimization, and other strategies
Seasoned executive management team: average 20-year tenure with
Toll Brothers

JANUARY 2026
DEAR SHAREHOLDER
Fiscal 2025 was another strong year for Toll Brothers. We delivered 11,292 homes,
the most in our history, at an average price of $960,000, generating a record $10.8
billion in home sales revenues. In a difficult sales environment, we executed well and
achieved an adjusted gross margin * of 27.3% for the year, which is a testament both to
the strength of our brand and our strategy of balancing pace and price. Our selling,
general and administrative expenses were 9.5% of home sales revenues for the year    
the third consecutive year they have been under 10%. As a result, we earned $13.49
per diluted share in fiscal 2025, compared to adjusted earnings    of $13.82 in fiscal
2024. In fiscal 2025, we also grew our community count by 9%, continued to produce
strong operating cash flows of $1.1 billion, returned approximately $750 million to
stockholders through share repurchases and dividends, and generated a return on
beginning equity of 17.6%. These results underscore the resilience of our business
model and the strength of our affluent customer base.
Our sharp focus on growth and efficiency     both in our operations and in our land
acquisition and development strategy     will remain key to our continued success.
Since fiscal 2020, we have increased home sales revenue by a compound annual
growth rate of 9.3%, driven in large part by our ability to increase community count    
from 317 selling communities on October 31, 2020 to 446 at the end of fiscal 2025. In
fiscal 2026, we expect to increase our community count by another 8     10%. This
growth, in turn, has been enabled by our strategy of broadening our geographies,
product lines and price points, as well as our shift to a more balanced portfolio of buildto-order and spec homes, all of which have significantly widened our addressable
market and allowed us to pursue a broader range of market opportunities. In addition,
these strategies have helped us bring down construction cycle times, improve inventory
turns, and gain efficiencies in the land development and construction processes. Our
spec strategy has also allowed us to appeal to buyers who need to move quickly but still
want a home that reflects their personal style. By selling many of our spec homes during
the early stages of construction, many of our customers can still choose their finishes at
the Toll Brothers Design Studio, giving us an important competitive advantage over
most spec homes.
Adjusted gross margin excludes interest expense and impairments and is a Non-GAAP number. See
appendix for reconciliation.

Adjusted to exclude $1.19 of earnings per share generated from the sale of a single parcel of land to a data
center operator. Adjusted earnings are non-GAAP. See appendix for full reconciliation.


While we have broadened our market by strategically diversifying our business,
we have continued to refine the qualities that set us apart as America   s luxury
home builder. This includes our premium brand, reputation for quality, prestigious
locations at the corner of Main & Main, distinctive architecture, unrivaled choice, and an
extraordinary customer experience. These features are key differentiators for our
affluent customers, a segment of the housing market that has proven to be remarkably
resilient. According to data recently published by the National Association of Realtors,
the median age of a first-time homebuyer is at an all-time high of 40, the median age of
all buyers is now almost 60 and just one in five sales is to a first-time buyer. This means
that the vast majority of sales in the market are to move-up or move-down buyers,
which plays right into our luxury strategy. Over 70% of our business serves the move-up
and move-down segments. These buyers are wealthier, have greater financial flexibility
and most have equity in their existing homes. The remaining 30% of our business is
focused on the older and more affluent first-time buyer, who is also feeling less
affordability pressure.
In addition, the long-term prospects for the housing market overall remain positive.
Demographics continue to be favorable, with Millennials still in their prime home buying
years and Gen Z right behind them. We also continue to have a structural undersupply
of millions of homes in this country, with the average age of a home in the U.S. now 40
years and growing. All of these trends support demand for new homes, and in particular
the luxury homes that Toll Brothers is known for.
We begin 2026 with a renewed focus on our core homebuilding operations and a
solid financial position. To this end, in 2025 we announced the sale of approximately
half of our Toll Brothers Apartment Living business, including our operating platform, for
$380 million. We intend to sell the remaining assets and fully exit the business over the
next few years. Our difficult but necessary decision to exit the multifamily development
business was driven by our belief that, as a public homebuilder, we have not received
full credit for the earnings generated by it. The sale unlocks significant capital, which we
will use to both grow our core homebuilding business and return cash to stockholders.
Our balance sheet remains strong, and we have ample liquidity, as we ended the year
with $3.5 billion in total liquidity and a net debt-to-capital    ratio of 15.3%. Our strong
financial position is a strategic asset, providing us with flexibility to pivot our land spend
and other capital uses to adjust to evolving market conditions.
We also begin 2026 with a strong leadership succession plan in place. In January
2026, Toll Brothers announced that I will be transitioning to the role of Executive
Chairman of the Board, and that Karl Mistry will take the helm as Toll Brothers    Chief
Executive Officer on March 30, 2026. Karl is an outstanding leader with a wealth of

Net debt-to-capital ratio is a non-GAAP number. See appendix for reconciliation.

experience gained over the past 22 years with the Company. Following Karl   s
promotion, I will remain active with the Company as Executive Chairman and ensure
that his transition to CEO is a smooth one, just as Bob Toll did for me.
This announcement is the culmination of a thoughtful long-term CEO succession
planning process led by our Board of Directors. As Fortune magazine noted,    The
announcement that Karl Mistry will become the next CEO of the luxury
homebuilder Toll Brothers is more than a routine leadership change. It highlights a
succession model at the Fortune 500 stalwart that   s built around continuity and
internal development rather than episodic change.    The article went on to
describe how Toll Brothers    has invested in talent early, tracked it over time, and
created credible internal pathways to senior leadership.    Indeed, the deep bench of
talent we have at Toll Brothers is a testament to one of the enduring legacies that Bob
Toll left to me and to all of us, which was his commitment to teaching and developing
the next generation of leadership. I am so pleased that this legacy has now come full
circle, and I have the utmost confidence that Karl is the right person to lead this great
Company into its next successful chapter.
In January 2026, Toll Brothers was named the #1 Most Admired Home Builder in
Fortune magazine   s list of the World   s Most Admired Companies. This is the ninth
year that we have achieved this honor, and it is a direct reflection of our employees   
dedication to excellence throughout our nearly 60 years of building luxury homes. I
would like to thank them, as well as our loyal shareholders, our trusted trade partners,
and our valued customers, for their ongoing enthusiasm and support of our Company.
We honor our history and continue to build our legacy every day as we deliver the
American Dream to thousands of customers each year, and we look forward to an even
brighter future of growth and value creation for all of our stakeholders.
Sincerely,
Douglas C. Yearley, Jr.
Chairman & Chief Executive Officer
3



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